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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Anglo African Agriculture Plc | LSE:AAAP | London | Ordinary Share | GB00BKBS0353 | ORD 2P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 4.00 | 3.50 | 4.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMAAAP
ANGLO AFRICAN AGRICULTURE PLC
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEARED 31 OCTOBER 2017
Company Registration No. 07913053 (England and Wales)
Chairman's Statement
For The Year Ended 31 October 2017
Overview
The 2017 financial year has seen the positive results of the significant
restructuring of the business announced last year. Revenues have grown 33% to GBP
2.1 million (2016: 29% growth to GBP1.6 million) This revenue growth was
exclusively delivered from Anglo African Agriculture's ("AAA") 100% owned
Dynamic Intertrade Ltd (Dynamic Intertrade).
The Company has consolidated its production capacity to around 250 tonnes per
month at its modern 3,000m² FSSC compliant facility in Cape Town, South Africa.
Dynamic Intertrade manufactures, imports and distributes herbs, spices and
seasonings for the food manufacturing sector. The upgrades to the spice milling
machines and associated infrastructure were completed and fully operational by
the end of February 2017. These upgrades, coupled with operational
efficiencies, assisted in the increase of gross profits by 60% to GBP517,747, and
a gross margin of 24.3% (2016: decreased 11% to GBP323,079, gross margin 20.1%)
Administrative expenses increased to GBP1,050,929 from GBP665,228 mainly as a
result of increased operational salary expenses, the impairment of the loan to
the now disposed joint venture and admission expenses related to issuing equity
for working capital, expansion and the acquisition of a 46.8% investment in an
associate.
* In the prior year the Company expected to complete the sale of the loss
making Guar Bean joint venture company, African Projects and Ventures
("APV"), for circa.GBP80,000, however the purchasers were unable to finance
the purchase and net GBP73,656 has been impaired in the current year.
* In line with the Group strategy, an acquisition of 46.8% in the South
African based Dynamic Intertrade Agri (Pty) Ltd was concluded during the
year. In the period since acquisition the share of loss from associates was
GBP9,954 (2016: GBP nil).
The consolidated loss for the year reflects the steps taken to re-position the
Company for continued growth into the future.
Prospects
Our core business continues to look strong into the 2018 year. The Company
continues to add new customers as it further develops the Company's specialty
spice blends, new ranges of BBQ spices, curry blends and beef jerky blends for
those markets.
The board has reviewed, and continues to focus on reviewing, a number of new
and exciting potential acquisitions to add value to AAA and its shareholders.
Thanks
The directors would like to take this opportunity to thank our shareholders,
staff and consultants and customers for their continued support, and I look
forward to chairing this exciting company as it grows and moves forward in
2018.
David Lenigas
Non-Executive Chairman
Strategic Report
For The Year Ended 31 October 2017
Overview
The primary objective of the strategic report is to provide information for the
shareholders and help them to assess how the directors have performed their
duty, under section 172 of the Act, to promote the success of the company and
to provide context for the related financial statements.
The duty of a director, as set out in section 172 of the Act, is to act in the
way he considers, in good faith, would be most likely to promote the success of
the company for the benefit of its members as a whole, and in doing so have
regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term;
(b) the interests of the company's employees;
(c) the need to foster the company's business relationships with suppliers,
customers and others;
(d) the impact of the company's operations on the community and the
environment;
(e) the desirability of the company maintaining a reputation for high standards
of business conduct; and
(f) the need to act fairly as between members of the company'.
Review of the Group's Business
Dynamic Intertrade (Pty) Ltd ("Dynamic") is based in a modern 3,000m² FSSC
compliant facility in Cape Town, South Africa and is involved in the
importation, milling, blending and packaging of agricultural products that
include herbs, spices, seasonings and confectionary for both the domestic and
export markets. Dynamic's commercial activities fall into two principal
categories: milling and/or blending of herbs and spices and bulk trading of
agricultural products.
Dynamic recorded an increase in top line revenue of 33% to GBP2.1 million in the
year ended 31st October 2017 (2016: Increase of 29% to GBP1.6 million). This
increase was largely due to stronger orders from customers for our core spice
lines of paprika and chilli based products, but also the ability of the company
to source substantially more raw products thanks to the money raised by the
Company during the year and the move towards introducing new batch blended
spice ranges for the fish and meat food manufacturing sector.
Gross Profits increased 60% to GBP517,747 (2016: decreased 11% to GBP323,079) and
represents a 24.4% gross margin (2016: 20.1%) mainly as a result of the
positive changes in product mix.
Underlying losses for the year increased to GBP532,509 (2016: GBP339,372) due to
higher administrative expenses. Administration expenses increased significantly
due to admission expenses of GBP89,895 (2016: GBP nil), the impairment of the loan
to African projects GBP73,566 (2016: GBP nil) and operational salaries increasing
to GBP329,058 (2016: GBP236,879).
As announced in the prior year, the AAA board had decided on the disposal of
the Guar bean venture, African Projects & Ventures (Pty) Ltd ("APV"), which
resulted in a loss on disposal of GBP73,566 (2016: GBP 18,853) taken to income and
expense.
In line with the Group strategy, an acquisition of 46.8% in the South African
based Dynamic Intertrade Agri (Pty) Ltd was concluded during the year. In the
current year since acquisition the loss from associates was GBP9,954 (2016: GBP
nil).
Our core business continues to look strong into 2018. The Company continues to
add new customers as it further develops the Company's specialty spice blends,
new ranges of BBQ spices, curry blends and beef jerky blends for those markets.
Strategic Report (Continued)
For The Year Ended 31 October 2017
Financing
On 17 March 2017, AAA raised GBP100,000, through the placing of 7,692,308 new
ordinary shares of 0.1p each in the Company at a price of 0.5p per placing
Share. The proceeds from this placing were used to support working capital
requirements at the Company's subsidiary, Dynamic Intertrade, during a period
of expansion in this business through diversification of both its product
range, a move to higher margin products and the expansion of its client base.
On 26 April 2017, the Company successfully completed a placing of 18,500,000
new ordinary shares at a placing price of 0.65 pence per share to raise gross
proceeds of GBP120,250. The proceeds of this placing were used to satisfy the
Company's creditors and provide the necessary working capital to continue
growing Dynamic Intertrade's core business.
Although the placing Shares have been allotted, because the combined number of
shares placed in 2016 and 2017 comprises more than 10% of the Company's issued
share capital, Admission of the placing shares requires the publication of a
prospectus in accordance with Prospectus Rule 1.2.1. This Prospectus was
published on 22 March 2017.
Acquisition Strategy
The Directors' strategy is to develop the business of the Group both
organically and by acquisition. It is intended that future acquisitions may be
made by the Company that will be complementary to the Group's businesses and
relate to production, transportation and trading of food products in
sub-Saharan Africa, including the acquisition of land for food production. The
Company has access to a range of prospects through the Directors' extensive
contact network and actively reviews acquisition opportunities on an ongoing
basis.
In line with the strategy, on 3 November 2016 the group acquired 46.8% in the
South African based, Dynamic Intertrade Agri (Pty) Ltd ("DIA"), which, since
acquisition has been reflected as an investment in associate.
Similarly, on 22 November 2016, the group agreed to dispose of its 49.9%
interest in Africa Projects and Ventures, a joint venture with Lamberti based
in South Africa. On 31 October 2017 the company's wholly owned subsidiary
Dynamic Intertrade (Pty) Limited ("Dynamic") entered into the Sale and Purchase
Agreement in terms of which Dynamic will sell the 49.9% of the allotted and
issued share capital of APV African Projects and Ventures (Pty) Limited to
Misty Rose Properties 11 CC, a company owned by Mr G Roach for the total sum of
ZAR1.00.
Key Performance Indicators
31 October 31 October
2017 2016
GBP GBP
Turnover 2,126,797 1,605,219
Gross Profit 517,747 323,079
Cash at bank and in hand 75,952 268,790
Underlying operating loss (369,700) (339,372)
Strategic Report (Continued)
For The Year Ended 31 October 2017
Loan Facility
Following acquisition, AAA lent Dynamic GBP500,000 repayable over a period of
five years from the first anniversary of drawdown. During the current year AAA
advanced Dynamic GBP147,902 (2016: GBP100,000). The loan bears interest at 2% above
LIBOR. Under the Loan Facility, AAA nominated a director to the board of
Dynamic.
Principal Risks and Uncertainties
The Directors consider the following risk factors to be of particular relevance
to the Group's activities. It should be noted that the list is not exhaustive
and that other risk factors not presently known or currently deemed immaterial
may apply. The risk factors are summarised below:
i. Development Risk
The Group's development will be, in part, dependent on the ability of the
Directors to continue to expand the current business and identify suitable
investment opportunities and to implement the Group's strategy. There is no
assurance that the Group will be successful in acquiring suitable investments.
ii. Sector Risk
The agriculture sector is a highly competitive market and many of the
competitors will have greater financial and other resources than the Company
and as a result may be in a better position to compete for opportunities.
The development of agricultural enterprises involves significant uncertainties
and risks including unusual climatic conditions such as drought, improper use
of pesticides, availability of labour and seasonality of produce, any one of
which could result in damage to, or destruction of crops, environmental damage
or pollution. Each of these could have a material adverse impact on the
business, operations and financial performance of the Group.
The market price of agricultural products and crops is volatile and affected by
numerous factors which are beyond the Group's control.
These include international supply and demand, the level of consumer product
demand, international economic trends, currency exchange rate fluctuations, the
level of interest rates, the rate of inflation, global or regional political
events, as well as a range of other market forces. Sustained downward movements
in agricultural prices could render less economic, or un-economic, any
development or investing activities to be undertaken by the Group. Certain
agricultural projects involve high capital costs and associated risks. Unless
such projects enjoy long term returns, their profitability will be uncertain
resulting in potentially high investment risk.
iii. Political and Regulatory Risk
African countries experience varying degrees of political instability. There
can be no assurance that political stability will persist in those countries
where the Group may have operations going forward. In the event of political
instability or changes in government policies in those countries where the
Group may operate, the operations and financial condition of the Group could be
adversely affected.
iv. Environmental Risks and Hazards
All phases of the Group's operations are subject to environmental regulation in
the areas in which it operates. Environmental legislation is evolving in a
manner that may require stricter standards and enforcement, increased fines and
penalties for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees.
Strategic Report (Continued)
For The Year Ended 31 October 2017
There is no assurance that existing or future environmental regulation will not
materially adversely affect the Group's business, financial condition and
results of operations. Environmental hazards may exist on the properties on
which the Group holds interests that are unknown to the Group at present. The
Board manages this risk by working with environmental consultants and by
engaging with the relevant governmental departments and other concerned
stakeholders.
v. Internal Control and Financial Risk Management
The Board has overall responsibility for the Group's systems of internal
control and for reviewing their effectiveness. The Group maintains systems
which are designed to provide reasonable but not absolute assurance against
material loss and to manage rather than eliminate risk.
* The key features of the Group's systems of internal control are as follows:
* Management structure with clearly identified responsibilities;
* Production of timely and comprehensive historical management information
presented to the Board;
* Detailed budgeting and forecasting;
* Day to day hands on involvement of the Executive Directors and Senior
Management; and
* Regular board and meetings and discussions with the Non-executive
directors.
The Group's activities expose it to a number of financial risks including cash
flow risk, liquidity risk and foreign currency risk.
vi. Environmental Policy
The Group is aware of the potential impact that its subsidiary and associate
companies may have on the environment. The Group ensures that it complies with
all local regulatory requirements and seeks to implement a best practice
approach to managing environmental aspects.
The wholly owned subsidiary, Dynamic Intertrade operates a Food Safety System
Certification ("FSSC") compliant facility in Cape Town. The FSSC provides a
framework for effectively managing the organization's food safety
responsibilities and. is fully recognized by the Global Food Safety Initiative
(GFSI) and is based on existing ISO Standards.
vii. Health and Safety
The Group's aim is to achieve and maintain a high standard of workplace safety.
In order to achieve this objective the Group provides ongoing training and
support to employees and sets demanding standards for workplace safety.
viii. Financing Risk
The development of the Group's business may depend upon the Group's ability to
obtain financing primarily through the raising of new equity capital or debt.
The Group's ability to raise further funds may be affected by the success of
existing and acquired investments. The Group may not be successful in procuring
the requisite funds on terms which are acceptable to it (or at all) and, if
such funding is unavailable, the Group may be required to reduce the scope of
its investments or the anticipated expansion. Further, Shareholders' holdings
of Ordinary Shares may be materially diluted if debt financing is not
available.
Strategic Report (Continued)
For The Year Ended 31 October 2017
ix. Credit Risk
The directors' have reviewed the forecasts prepared by both AAA and Dynamic and
believe that Dynamic has adequate resources available to meet its obligations
to make capital repayments of the loan to AAA.
In the event that Dynamics' trading performance is below that forecast, AAA
will exercise a degree of flexibility on the repayment timetable. With the
Dynamic turnover increasing and the Group forecasting profitability there is no
requirement for any impairment charge.
x. Liquidity Risk
The Directors have reviewed the working capital requirements of both AAA and
Dynamic Intertrade and DIA and believe that, following stress tests and
variance analysis on the forecasts, there is sufficient working capital to fund
the business while expanding turnover and achieving sustainable profitability.
xi. Market Risk
The group's investments in an associate company comprise a non-controlling
shareholding in an unlisted company. The shares are not readily tradable and
any monetisation of the shares is dependent on finding a willing buyer.
xii. Capital Risk
The Group manages its capital resources to ensure that entities in the Group
will be able to continue as a going concern, while maximising shareholder
return.
The capital structure of the Group consists of equity attributable to
shareholders, comprising issued share capital and reserves. The availability of
new capital will depend on many factors including a positive operating
environment, positive stock market conditions, the Group's track record, and
the experience of management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash resources exist
or will be made available to finance operations but controls over expenditure
are carefully managed.
Going Concern
These consolidated financial statements are prepared on the going concern
basis. The going concern basis assumes that the Group will continue in
operation for the foreseeable future and will be able to realise its assets and
discharge its liabilities and commitments in the normal course of business. The
Group has incurred significant operating losses and negative cash flows from
operations as the Group continued to expand its operations during the year
under review.
During the year, the Group raised GBP113,035 in net funding through share
subscriptions to fund further investment in Dynamic Intertrade in order to
improve production efficiencies and to fund working capital.
Immediately subsequent to the year-end, the Group raised a further GBP150,000
through the further issue of shares. There remains an active and very liquid
market for the Group's shares.
The Directors have prepared cash flow forecasts for the period ended 31 October
2018, taking into account forecast operating cash flows and capital expenditure
requirements for Dynamic Intertrade, available working capital and forecast
expenditure for the rest of the Group including overheads and other costs. The
forecasts include additional funding requirements which the directors believe
will be met.
Strategic Report (Continued)
For The Year Ended 31 October 2017
In the event that Dynamic Intertrade fails to meet revenue predictions and any
other relevant risk factors arise, the Group will need to obtain additional
debt finance or equity to fund its operations for the period to 31 October
2018. The cash flow forecast is dependent on production targets being met at
Dynamic Intertrade, maintaining the invoice financing arrangements, generating
future sales and the selling prices remaining stable during the period to 31
October 2018.
After careful consideration of the matters set out above, the Directors are of
the opinion that the Group will be able to undertake its planned activities for
the period to 31 October 2018 from production and from additional fund raising
and have prepared the consolidated financial statements on the going concern
basis. Nevertheless due to the uncertainties inherent in meeting its revenue
predictions and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any adjustments that
would result if the Group was unable to continue as a going concern.
On behalf of the Board
David Lenigas, Chairman
23 February 2018
Directors' Report
For The Year Ended 31 October 2017
The Directors present their Report and Financial Statements for the year ended
31 October 2017.
Principal Activities
The principal activity of the Group in the year was investing and trading in
the agriculture and ancillary sectors in Africa.
Investing Policy
AAA was established as a means to invest in or acquire companies engaged in the
agriculture and ancillary sectors in Africa. The Directors intend to use their
collective experience to identify appropriate investment opportunities in the
production, transportation and trading of food products.
Directors
The following Directors have held office in the year:
Andrew Monk
George Roach
David Lenigas
Robert Scott
Matthew Bonner (Appointed 1 May 2017)
Andrew Monk, Non- Executive Director
Andrew has a successful stock broking career spanning 30 years. In that time he
has built up strong relationships with many major UK institutions. He was
employed by Hoare Govett ABN AMRO for 11 years before founding Oriel Securities
as Joint CEO. Andrew later became CEO of Blue Oar Plc, and Chief Executive of
VSA Capital, an investment banking and institutional broking firm focussed on
natural resources, including agriculture.
George Roach, Non-Executive Director
George Roach is an experienced, senior business leader and entrepreneur who has
spent his career in the resources sector mainly in Sub-Saharan Africa. He is,
inter alia, currently Chief Executive Office of Premier African Minerals Inc.,
an AIM quoted, African resources group of companies.
David Lenigas, Non-Executive Chairman
David Lenigas is an experienced executive and entrepreneur with a wide range of
board experience in both public and private companies. He has an extensive
knowledge of the African food manufacturing, processing and marketing sector
having previously served as the Executive Chairman of Lonrho Plc and is
currently the Executive Chairman of food logistics and marketing group AfriAg
Global Plc.
Robert Scott, Executive Director
Rob has over 20 years of finance experience, with the last ten years
specifically focused in Africa within the mining industry and general
investments. He has held executive and senior positions with a number of
companies, as well as having served on both public and private company boards.
He has been involved in companies with locations in South Africa, Angola,
Mozambique, Zimbabwe, DRC, CAR, Tanzania, Kenya and Namibia amongst others. Rob
has also previously been involved in mining, hotels, agriculture and
construction industries.
Matthew Bonner, Non-Executive Director
Matthew Bonner has significant financial leadership experience within the
mining, energy and agriculture sectors. He is currently Chief Operating Officer
at EAS Advisors LLC, a New York based corporate advisory firm focused on
supporting public and private companies operating in the natural resource and
commodity sectors in emerging markets.
Directors' Report (Continued)
For The Year Ended 31 October 2017
Directors' remuneration, shareholding and options
The Directors' remuneration in the year ended 31 October 2017 is set out in
note 7 of the accounts.
Shareholding
As at 31 October 2017, the Directors of the Company held the following shares:
2017 2017 2016 2016
Director Shareholding Percentage of Shareholding Percentage of
the Company's the Company's
Ordinary Share Ordinary Share
Capital Capital
George Roach* 33,751,333 16.31% 26,059,025 14,4%
David Lenigas 22,388,000 10.82% 22,388,000 12,4%
Andrew Monk** 12,126,761 5.86% 2,000,000 1,1%
Robert Scott 1,693,078 0.82% - -
Matthew Bonner 746,269 0.36% - -
Neil Herbert*** - - 11,000,000 6,1%
* 16,288,646 of these shares are held by or on behalf of Corestar Holdings Ltd
and 5,000,000 of these shares are held by or on behalf of Coc'Roach Limited.
Corestar Holdings Ltd is a BVI company which is wholly-owned by the Corestar
STAR Trust, a trust established for the furtherance of certain purposes which
could include the provision of benefits to George Roach and his family, at the
discretion of the trustees of the trust. Coc'roach Limited is owned by the
Coc'roach Trust. The Coc'roach Trust is a partial discretionary trust pursuant
to the terms of which George Roach and his family may fall within the class of
potential beneficiaries.
**Andrew Monk's entire shareholding is held within his SIPP (Fitel Nominees
Limited) and Hargreave Hale Nominees Limited
*** Neil Herbert resigned as a Director on 05 September 2016.
Share options
As at 31 October 2017 the Directors share options were:
2017 2017 2016 2016
Options at 1p Options @0.55p Options at 1p Options @0.55p
Director (expiring 5 (expiring 5 (expiring 5 (expiring 5
September 2022) September 2022) September September
2022) 2022)
George Roach 1,839,046 2,000,000 1,839,046 2,000,000
Andrew Monk 1,839,046 2,000,000 1,839,046 2,000,000
Robert Scott 1,000,000 - 1,000,000 -
Matthew Bonner 3,600,000 - - -
Sub-total 8,278,092 4,000,000 4,678,092 4,000,000
Neil Herbert* 1,839,046 2,000,000 1,839,046 2,000,000
Total 10,117,138 6,000,000 5,517,138 6,000,000
The total warrants and share options outstanding at 31 October 2017 were
23,717,514 (2016 - 29,994,844). Refer to note 22 for more detail.
* Neil Herbert resigned as a Director on 05 September 2016.
Directors' Report (Continued)
For The Year Ended 31 October 2017
Dividends
No dividends will be distributed for the current year (2016 - nil).
Supplier Payment Policy
It is the Group's payment policy to pay its suppliers in conformance with
industry norms. Trade payables are paid in a timely manner within contractual
terms, which is generally 30 to 45 days from the date an invoice is received.
Substantial Interests
The Group has been informed of the following shareholdings that represent 3% or
more of the issued Ordinary Shares of the Company as at 21 February 2018:
2017 2017 2016 2016
Shareholder Shareholding Percentage of Shareholding Percentage of
the Company's the Company's
Ordinary Share Ordinary
Capital Share Capital
HSBC Global Custody 22,388,060 9.9% 22,388,060 12.4%
Nominee
Vidacos Nominees Limited 5.9% 7.5%
13,462,687 13,462,687
SVS (Nominees) Limited 11,735,541 5.2% - -
Huntress (Ci) Nominees 11,000,000 4.9% 11,000,000 6.1%
Limited
Hargreaves Lansdown 10,597,855 4.7% - -
(Nominees) Limited
Hargreave Hale Nominees 10,126,761 4.5% - -
Limited
Barclays Direct 9,801,136 4.3% - -
Investing Nominees
Limited
Lynchwood Nominees 9,371,343 4.1% - -
Limited
Vidacos Nominees Limited 3.8% 4.7%
8,596,338 8,596,338
JIM Nominees Limited 8,575,072 3.8%
Platform Securities 8,500,000 3.7% 9,000,000 5.0%
Nominees Limited
ZRH Nominees (0105) LTD 7,692,308 3.4% - -
Rulegale Nominees 7,500,000 3.3% 7,500,000 4.1%
Limited
Auditors
Jeffreys Henry LLP has expressed its willingness to continue in office and a
resolution to reappoint them will be proposed at the Annual General Meeting.
Directors' Report (Continued)
For The Year Ended 31 October 2017
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations. Company
law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors have elected to prepare the financial
statements in accordance with International Financial Reporting Standards
(IFRS) as adopted for use in the European Union. Under company law the
Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the Company and
the Group and of the profit or loss of the Company and the Group for that year.
In preparing these financial statements, the Directors are required to:
* Select suitable accounting policies and then apply them consistently;
* Make judgements and accounting estimates that are reasonable and prudent;
* State whether the Company financial statements have been prepared in
accordance with IFRS as adopted by the European Union subject to any
material departures disclosed and explained in the Financial Statements;
* Prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions, disclose with
reasonable accuracy at any time the financial position of the Company and the
Group and enable them to ensure that the financial statements comply with the
Companies Act 2006.
The Directors are responsible for safeguarding the assets of the Company and
Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website.
Statement of Disclosure to Auditors
Each person who is a Director at the date of approval of this Annual Report
confirms that:
* So far as the Directors are aware, there is no relevant audit information
of which the Company's auditors are unaware; and
* Each Director has taken all the steps he ought as Director, in order to
make himself aware of any relevant audit information and to establish that
the Company's auditors are aware of that information.
* Each Director is aware of and concurs with the information included in the
Strategic Report.
Branches Outside the UK
The Group head office is in London and both the Dynamic Intertrade Pty Limited
and Dynamic Intertrade Agri (Pty) Ltd offices are located in South Africa.
Directors' Report (Continued)
For The Year Ended 31 October 2017
Post Balance Sheet Events
Further information on events after the reporting date is set out in note 25.
The Directors' have chosen to produce a Strategic Report that discloses a fair
review of the Group's business, the key performances metrics that the Directors
review along with a review of the key risks to the business.
In accordance with Section 414C (1) of the Companies Act 2006, the group
chooses to report the review of the business, the future outlook and the risks
and uncertainties faced by the Company in The Strategic Report on page 5.
Strategic Report
In accordance with Section 414C (1) of the Companies Act 2006, the group
chooses to report the review of the business, the future outlook and the risk
and uncertainties faced by the Company in The Strategic report on page 5 to 10.
On Behalf of the Board
David Lenigas, Chairman
23 February 2018
Directors' Remuneration Report
For The Year Ended 31 October 2017
Introduction
The information included in this report is not subject to audit other than
where specifically indicated.
Remuneration Committee
The remuneration committee consists of Andrew Monk and George Roach. This
committee's primary function is to review the performance of executive
directors and senior employees and set their remuneration and other terms of
employment.
The committee is also responsible for administering any share option scheme.
The table indicates share options held by the current directors, directors of
the subsidiary and former directors of the company.
2017 2017 2016 2016
Director Warrants Options Warrants Options
George Roach - 3,839,046 - 3,839,046
Andrew Monk - 3,839,046 - 3,839,046
Robert Scott - 1,000,000 - 1,000,000
Matthew Bonner - 3,600,000 - -
Mark Nielson - 3,000,000 - 3,000,000
Totals - 15,278,092 - 11,678,092
The Company has one executive director .
The remuneration policy
It is the aim of the committee to remunerate executive directors competitively
and to reward performance. The remuneration committee determines the company's
policy for the remuneration of executive directors, having regard to the UK
Corporate Governance Code and its provisions on directors' remuneration.
Service agreements and terms of appointment
The directors have service contracts with the company.
Directors' interests
The directors' interests in the share capital of the company are set out in the
Directors' report.
Directors' emoluments
Details of the remuneration packages are included in note 7 - notes to the
Consolidated Financial statements.
No pension contributions were made by the company on behalf of its directors.
Directors' Remuneration Report
For The Year Ended 31 October 2017 (Continued)
Approval by shareholders
At the next annual general meeting of the company a resolution approving this
report is to be proposed as an ordinary resolution.
This report was approved by the board on 23 February 2018.
On Behalf of the Board
Andrew Monk - Committee Chairman
23 February 2018
Corporate Governance
For The Year Ended 31 October 2017
Policy
The policy of the board is to manage the affairs of the Company with reference
to the UK Corporate Governance Code, which is publicly available from the
Financial Reporting Council.
Application of principles of good governance by the board of directors
The board currently comprises of four non-executive directors and one executive
director (2016: four non-executive directors).
David Lenigas was appointed chairman on 5 September 2016.
The articles of association require a third, but not greater than a third, of
the directors to retire by rotation each year.
There are regular board meetings each year and other meetings are held as
required to direct the overall company strategy and operations. Board meetings
follow a formal agenda covering matters specifically reserved for decision by
the board. These cover key areas of the company's affairs including overall
strategy, acquisition policy, approval of budgets, major capital expenditure
and significant transactions and financing issues.
The board has delegated certain responsibilities, within defined terms of
reference, to the audit committee and the remuneration committee as described
below. The appointment of new directors is made by the board as a whole. During
the year ended 31 October 2017, there were three formal board meetings, one
audit committee meeting and one remuneration committee meeting. All meetings
were fully attended.
The board undertakes a formal annual evaluation of its own performance and that
of its committees and individual directors, through discussions and one-to-one
reviews with the Chairman and the Senior Independent Director.
Audit committee
The audit committee is currently headed by David Lenigas, the Chairman, and
also comprises George Roach and Robert Scott. The committee's terms of
reference are in accordance with the UK Corporate Governance Code. The
committee reviews the company's financial and accounting policies, interim and
final results and annual report prior to their submission to the board,
together with management reports on accounting matters and internal control and
risk management systems. It reviews the auditors' management letter and
considers any financial or other matters raised by both the auditors and
employees.
The committee considers the independence of the external auditors and ensures
that, before any non-audit services are provided by the external auditors, they
will not impair the auditor's objectivity and independence. During the year,
non-audit services totalled GBP750 (2016 - GBPnil) and covered normal taxation and
other related compliance work, which did not impact on the auditors'
objectivity or independence.
There is currently no internal audit function within the Group. The directors
consider that this is appropriate of a Group of this size.
The committee has primary responsibility for making recommendations to the
board in respect of the appointment, re-appointment and removal of the external
auditors.
On Behalf of the Board
David Lenigas, Chairman
23 February 2018
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc
Independent auditor's report to the members of Anglo African Agriculture Plc
Opinion
We have audited the financial statements of Anglo African Agriculture Plc (the
'parent company') and its subsidiaries (the 'group') for the year ended 31
October 2017 which comprise the consolidated income statement, consolidated
statement of comprehensive income, consolidated statement of changes in equity,
company statement of changes in equity, consolidated statement of financial
position, company statement of financial position, consolidated statement of
cash flows, company statement of cash flows and notes to the financial
statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in the preparation of the
group financial statements is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial
reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting
Standards.
In our opinion:
* the financial statements give a true and fair view of the state of the
group's and of the parent company's affairs as at 31 October 2017 and of
the group's loss for the year then ended;
* the group financial statements have been properly prepared in accordance
with IFRSs as adopted by the European Union;
* the parent company financial statements have been properly prepared in
accordance with IFRS's as adopted by the European Union; and
* the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC's Ethical Standard as
applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 a. in the financial statements, which explains that
the Group has incurred significant operating losses and negative cash flows
from operations. The Group forecasts include additional funding requirements
upon which the Group is dependent. The directors are satisfied that these
funding requirements will be met. Additionally, in the event that Dynamic
Intertrade fails to meet its revenue predictions, the Group will need to obtain
additional debt or equity financing in order to fund its operations for at
least the next twelve months. The directors are satisfied that this can be
achieved. These events or conditions, along with other matters as set out in
note 2 a. indicate that a material uncertainty exists that may cast doubt on
the Group's ability to continue as a going concern. Our opinion is modified in
respect of this matter.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
Our audit approach
Overview
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. This is not a complete list of all risks identified by our
audit.
* Possible impairment of Goodwill and the Long term investment
* Recoverability of long term loans
* Going concern assumption
* Accounting treatment of acquisition of associate
These are explained in more detail below
Materiality:
Group financial statements:
* GBP51,000 (31 October 2016: GBP42,000)
* Based on the average of the following:
a. 2% of Revenue
b. 2.5% of Gross Assets
c. 10% of Net Profit
Company financial statements:
* GBP26,000 (31 October 2016: GBP20,000)
* Based on the average of the following:
a. 2.5% of Gross Assets
b. 10% of Net Profit
Audit scope
* We conducted audits of the complete financial information of Anglo African
Agriculture plc, Dynamic Intertrade Pty Limited, Dynamic Intertrade Agri
Pty Limited and APV Joint Venture.
* We performed specified procedures over certain account balances and
transaction classes at other Group companies.
* Taken together, the Group companies over which we performed our audit
procedures accounted for 100% of the absolute profit before tax (i.e. the
sum of the numerical values without regard to whether they were profits or
losses for the relevant reporting units) and 100% of revenue.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
Key audit matters
Key audit matter How our audit addressed the key audit
matter
Possible impairment of goodwill and
long term investment
We considered whether the component
During the year the Group carried of the Group was still profit making
goodwill of GBP226,644 (31 October and had an ability to trade
2016: GBP226,644) in relation to the successfully into the future.
excess sum of consideration paid and
the fair value of the acquirer's We reviewed the component auditor's
previously held equity interest in working papers and carried out
the acquiree over the net of the additional testing on high risk
acquisition date amounts of the areas.
identifiable assets acquired and the
liabilities assumed. We tested management's assumption
that no impairment existed by
The directors have assessed whether carrying out sensitivity analysis
the goodwill shows any indicators of through changing the assumptions used
impairment. and re- running the cash flow
forecast.
The adjusted company profit before
tax, which is considered by We reviewed the latest management
management to be a key metric and is accounts to gauge how trading was
discussed in their discussion of carrying on in the 2018 financial
KPIs, is directly impacted by the year.
amount of costs capitalised and the
amounts included in the The net assets of the main subsidiary
reconciliation of the adjusted income exceeds that of the investment
measures. carrying value, supported by robust
performance with no going concern
We focused on whether impairment was issues.
required and if the unallocated
goodwill should be allocated to an We found no material exceptions in
individual investment. our testing.
Recoverability of long term loans
The Company had long term loans owed The analysis work undertaken by the
of GBP802,789 at the year ended 31 directors shows that the subsidiary
October 2017. (31 October 2016: GBP is expected to remain cash generative
637,798) and profitable based on their
business. We have understood and
The Directors have confirmed the assessed the methodology used by the
loans are all treated as long term, directors in this analysis and
with flexible repayment terms, with determined it to be reasonable.
interest all rolled up and included
in any repayment due. We reviewed the component auditor's
working papers and carried out
additional testing on high risk
The Company had a long term loan to areas.
Dynamic Intertrade Limited of GBP
415,000 (31 October 2016: GBP415,000) We tested management's assumption
at the year ended 31 October 2017. that no impairment existed by
carrying out sensitivity analysis
The Company had an intercompany loan through changing the assumptions used
to Dynamic Intertrade Limited of GBP and re- running the cash flow
387,789 (31 October 2016: GBP222,798) forecast.
at the year ended 31 October 2017.
Going concern assumption Management's going concern forecasts
include a number of assumptions
The Group is dependent upon its related to future cash flows and
ability to generate sufficient cash associated risks. Our audit work has
flows to meet continued operational focused on evaluating and challenging
costs and hence continue trading. the reasonableness of these
Foreign exchange risk continues to be assumptions and their impact on the
a key risk in South Africa, which can forecast period.
affect results annually.
Specifically we obtained, challenged
The going concern assumption is and assessed managements going
dependent on future growth of the concern forecast and performed
current business along with future procedures including:
acquisitions to grow the scale of the
business and future capital raises.
Accounting treatment adopted on
acquisition of associate
The Company purchased a 46.81% equity We reviewed the final agreement and
interest in Dynamic Intertrade Agri transaction which took place, to
Pty Limited ("the Associate") in unsure all elements of the
November 2016 for a share for share transaction were treated correctly.
consideration of GBP100,000 plus a
deferred consideration of GBP50,000 if We reviewed the associate's financial
certain performance target were met. statements to see if it met the
additional requirements for the
The value of the associate at 31 additional consideration.
October 2017 was GBP90,046 (31 October
2016 : GBPnil) We reviewed the net assets of the
Associate and recalculated the net
The investment is treated under IAS assets figure and multiplied it by
28 by management as its deemed to the percentage equity interest held.
meet the definition of an associate
as it has between 20% - 50% equity
holding and has an elected member to
the board.
The investment has been treated at
cost minus the percentage loss of net
assets at year end.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set
certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial statements
as a whole.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
Based on our professional judgment, we determined materiality for the financial
statements as a whole as follows:
Group financial Company financial
statements statements
Overall materiality GBP51,000 (31 October 2016: GBP24,000 (31 October 2016:
GBP42,000). GBP20,000).
How we determined it Based on the average of Based on the average of
10% of profit before tax, 10% of loss before tax
2.5% of gross assets and and 2.5% of gross assets.
2% of Revenue.
Rationale for We believe that profit We believe that profit
benchmark applied before tax is a primary before tax is a primary
measure used by measure used by
shareholders in assessing shareholders in assessing
the performance of the the performance of the
Group whilst gross asset Company whilst gross
values and revenue are a asset values are a
representation of the representation of the
size of the Group; both size of the Company; both
are generally accepted are generally accepted
auditing benchmarks. auditing benchmarks.
For each component in the scope of our Group audit, we allocated a materiality
that is less than our overall Group materiality. The range of materiality
allocated across components was between GBP10,000 and GBP35,000.
We agreed with the Audit Committee that we would report to them misstatements
identified during our audit above GBP2,550 (Group audit) (31 October 2016: GBP
1,800) and GBP1,300 (Company audit) (31 October 2016: GBP1,000) as well as
misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
looked at where the directors made subjective judgments, for example in respect
of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our
audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the Group and the Company, the accounting processes
and controls, and the industry in which they operate.
The Group financial statements are a consolidation of 4 reporting units,
comprising the Group's operating businesses and holding companies.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
We performed audits of the complete financial information of Anglo African
Agriculture plc, Dynamic Intertrade Pty Limited, Dynamic Intertrade Agri Pty
Limited and APV Joint Venture reporting units, which were individually
financially significant and accounted for 100% of the Group's revenue and 100%
of the Group's absolute profit before tax (i.e. the sum of the numerical values
without regard to whether they were profits or losses for the relevant
reporting units). We also performed specified audit procedures over goodwill
and other intangible assets, as well as certain account balances and
transaction classes that we regarded as material to the Group at the 4
reporting units, one based in the United Kingdom and 3 more in South Africa.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
* the information given in the strategic report and the directors' report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
* the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company
and its environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
* adequate accounting records have not been kept by the parent company, or
returns adequate for our audit have not been received from branches not
visited by us; or
* the parent company financial statements are not in agreement with the
accounting records and returns; or
* certain disclosures of directors' remuneration specified by law are not
made; or
* we have not received all the information and explanations we require for
our audit.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on
page 30, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's and parent company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
* Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
* Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
group's internal control.
* Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
* Conclude on the appropriateness of the directors' use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast
significant doubt on the group's or the parent company's ability to
continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor's report to the
related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the group or the parent company to cease to
continue as a going concern.
* Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and whether the financial statements
represent the underlying transactions and events in a manner that achieves
fair presentation.
Independent Auditors' Report
To the Members of Anglo African Agriculture Plc (Continued)
* Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have
complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Use of this report
This report, including the opinions, has been prepared for and only for the
parent company's members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other matters which we are required to address
We were appointed as auditors by the Company at the Annual General Meeting on
24 April 2017. Our total uninterrupted period of engagement is 4 years,
covering the periods ending 31 March 2013 to 31 October 2017.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Sanjay Parmar (Senior Statutory Auditor)
For and on behalf of Jeffreys Henry LLP, Statutory Auditor
Finsgate
5-7 Cranwood Street
London EC1V 9EE
23 February 2018
Statement of Comprehensive Income
For the Year Ended 31 October 2017
Group Group Company Company
Year Ended Year Ended Year Ended Year Ended
Notes 31 October 31 October 2016 31 October 2017 31 October 2016
2017
GBP GBP GBP GBP
Turnover 2,126,797
1,605,219 - -
Cost of Sales (1,609,050)
(1,282,140) - -
Gross Profit 517,747
323,079 - -
Other Income 5 673
2,767 - -
Administrative expenses 8 (860,417) (161,405) (103,765)
(665,218)
Share of loss of 8 (9,954) - (9,954) -
associate
Impairment of loan to 8 (73,566) - - -
Joint Venture
Admission expenses 8 (106,992) - (106,992) -
Operating loss (532,509) (278,351) (103,765)
(339,372)
Bank Interest Receivable - - 4,109
4,109
Finance Costs 9 (17,748)
(97,771) - -
Loss before taxation (550,257) (278,351) (99,656)
(433,034)
Tax on loss on ordinary 10 - - - -
activities
Loss and total (550,257) (278,351) (99,656)
comprehensive income for (433,034)
the year
Basic and diluted loss 11 (0.28p) (0.38p)
per share
Since there is no other comprehensive loss, the loss for the year is the same
as the total comprehensive loss for the year attributable to the owners of the
Group.
Statement of Changes in Equity
For the Year Ended 31 October 2017
Group Group Group Group Group
Share Share Share Retained Total
Capital Premium Based Earnings Equity
Payments
Reserve
GBP GBP GBP GBP GBP
Balance at 1 November 94,896 1,107,373 11,586 (864,254) 349,601
2015
Share Based Payments - - (3,714) - (3,714)
Reserve
Issue of Shares 85,896 464,104 - - 550,000
Loss for the year - - - (433,034) (433,034)
Balance at 31 October 180,792 1,571,477 7,872 (1,297,288) 462,853
2016
Share Based Payments - - 8,573 - 8,573
Reserve
Issue of Shares 26,192 194,058 - - 220,250
Loss for the year - - - (550,257) (550,257)
Balance at 31 October 206,984 1,765,535 16,445 (1,847,545) 141,419
2017
Share capital is the amount subscribed for shares at nominal value.
The share premium has arisen on the issue of shares at a premium to their
nominal value.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Company Statement of Changes in Equity
For the Year Ended 31 October 2017
Company Company Company Company Company
Share Capital Share Share Based Retained Total
Premium Payments Earnings Equity
Reserve
GBP GBP GBP GBP GBP
Balance at 1 November 94,896 1,107,373 11,586 (509,756) 704,099
2015
Share Based Payments - - (3,714) - (3,714)
Reserve
Issue of Shares 85,896 464,104 - - 550,000
Loss for the year - - - (99,656) (99,656)
Balance at 31 October 180,792 1,571,477 7,872 (609,412) 1,150,729
2016
Share Based Payments - - 8,573 - 8,573
Reserve
Issue of Shares 26,192 194,058 - - 220,250
Loss for the year - - - (278,351) (278,351)
Balance at 31 October 206,984 1,765,535 16,445 (887,763) 1,101,201
2017
Statement of the Financial Position
As at 31 October 2017
Group Group Company Company
Notes 31 October 2017 31 October 2016 31 October 2017 31 October 2016
GBP GBP GBP GBP
Assets
Non-Current Assets
Investment in 13 - - 297,915 297,915
Subsidiaries
Investment in Associate 13 90,046 - 90,046 -
Loan to Joint Venture 14 - 84,473 - -
Long Term Intercompany 794,839 637,798
Loans - -
Property, Plant and 15 121,322 159,595
Equipment - -
Goodwill on 16 226,644 226,644
Consolidation - -
438,012 470,712 1,182,800 935,713
Current assets
Inventories 17 203,782 166,393 - -
Trade and Other 18 380,414 440,455 18,470 8,134
Receivables
Cash and Cash 19 75,952 268,790 43,299 240,337
Equivalents
660,148 875,638 61,769 248,471
Total Assets 1,098,160 1,346,350 1,244,569 1,184,184
Equity and Liabilities
Share Capital 21 206,984 180,792 206,984 180,792
Share Premium Account 21 1,765,535 1,571,477 1,765,535 1,571,477
Share-Based Payments 22 16,445 7,872 16,445 7,872
Reserve
Accumulated Deficit (1,847,545) (1,297,288) (887,763) (609,412)
Total Equity 141,419 462,853 1,101,201 1,150,729
Current Liabilities
Trade and Other 20 956,741 883,497 143,368 33,455
Payables
Total Liabilities 956,741 883,497 143,368 33,455
Total Equity and 1,098,160 1,346,350 1,244,569 1,184,184
Liabilities
Cash Flow Statements
For the year ended 31 October 2017
Group Group Company Company
Year Ended Year Ended Year Ended Year Ended
Notes 31 October 31 October 31 October 31 October
2017 2016 2017 2016
GBP GBP GBP GBP
Cash flows from operating
activities
Operating loss (532,509) (339,372) (278,351) (99,656)
Add: Depreciation 15 52,400 49,116 - -
Add: Foreign exchange movements 15 38,316 (28,545) - -
on fixed assets
Add: Movement on share based 8,573 (3,714) 8,573 (3,714)
payments reserve
Professional fees on raising 7,215 - 7,215 -
Share of loss of associate 13.1 9,954 - 9,954 -
Loss on disposal of jointly 73,566 - - -
controlled entity
Changes in working capital
(Increase) / decrease in (37,389) 165,113 - -
inventories
(Increase) / decrease in 60,041 (217,378) (10,336) 101,638
receivables
Increase / (decrease) in payables 73,244 162,448 109,913 (23,872)
Interest received - 4,109 - -
Finance Costs (17,748) (97,771) - -
Net cash flow from operating (264,337) (305,994) (153,032) (25,604)
activities
Investing Activities
Acquisition of fixed assets 15 (30,629) (55,729) - -
Disposal of fixed assets 15 - - - -
Increase / (decrease) in loans - (10,907) (1,894) - (322,798)
jointly controlled entities
Long term intercompany loan - - (157,041) -
advanced
Sale of investments - 18,514 - -
Net cash flow from investing (41,536) (39,109) (157,041) (322,798)
activities
Cash flows from financing
activities:
Net proceeds from issue of shares 21 113,035 550,000 113,035 550,000
Net cash flow from financing 113,035 550,000 113,035 550,000
activities
Net cash flow (192,838) 204,897 (197,038) 201,598
Opening Cash and cash equivalents 19 268,790 63,893 240,337 38,739
Closing Cash and cash equivalents 19 75,952 268,790 43,299 240,337
The notes on pages 31 to 56 form part of these financial statements
Approved by the Board and authorised for issue on 23 February 2018.
David Lenigas, Chairman
Company Registration No. 07913053
Notes to the Consolidated Financial Statements
1. General Information
Anglo African Agriculture plc is a company incorporated in the United Kingdom.
Details of the registered office, the officers and advisers to the Company are
presented on the Directors and Advisers page at the beginning of this report.
The Company has a standard listing on the London Stock Exchange main market.
The information within these financial statements and accompanying notes have
been prepared for year ended 31 October 2017 with comparatives for year ended
31 October 2016.
2. Basis of Preparation and Significant Accounting Policies
The consolidated financial statements of Anglo African Agriculture plc have
been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union (IFRS as adopted by the EU), IFRS Interpretations
Committee and the Companies Act 2006 applicable to companies reporting under
IFRS.
The consolidated financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgment or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 3. The preparation of financial
statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policies
and reported amounts of assets, liabilities, income and expenses. Although
these estimates are based on management's experience and knowledge of current
events and actions, actual results may ultimately differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the year in which the
estimates are revised if the revision affects only that year or in the year of
the revision and future year if the revision affects both current and future
year.
a. Going Concern
These consolidated financial statements are prepared on the going concern
basis. The going concern basis assumes that the Group will continue in
operation for the foreseeable future and will be able to realise its assets and
discharge its liabilities and commitments in the normal course of business. The
Group has incurred significant operating losses and negative cash flows from
operations as the Group continued to expand its operations during the year
under review.
During the year, the Group raised GBP113,035 in net funding through share
subscriptions to fund further investment in Dynamic Intertrade in order to
improve production efficiencies and to fund working capital.
Immediately subsequent to the year-end, the Group raised a further GBP150,000
through the further issue of shares. There remains an active and very liquid
market for the Group's shares. The Group is currently finalising a loan
agreement facility of R2 million.
The Directors have prepared cash flow forecasts for the period ended 31 October
2018, taking into account forecast operating cash flows and capital expenditure
requirements for Dynamic Intertrade, available working capital and forecast
expenditure for the rest of the Group including overheads and other costs. The
forecasts include additional funding requirements which the directors believe
will be met.
Notes to the Consolidated Financial Statements
In the event that Dynamic Intertrade fails to meet revenue predictions and any
other relevant risk factors arise, the Group will need to obtain additional
debt finance or equity to fund its operations for the period to 31 October
2018. The cash flow forecast is dependent on production targets being met at
Dynamic Intertrade, maintaining the invoice financing arrangements, generating
future sales and the selling prices remaining stable during the period to 31
October 2018.
After careful consideration of the matters set out above, the Directors are of
the opinion that the Group will be able to undertake its planned activities for
the period to 31 October 2018 from production and from additional fund raising
and have prepared the consolidated financial statements on the going concern
basis. Nevertheless due to the uncertainties inherent in meeting its revenue
predictions and obtaining additional fund raising there can be no certainty in
these respects. The financial statements do not include any adjustments that
would result if the Group was unable to continue as a going concern.
New and Amended Standards Adopted by the Company
There are no IFRS and IFRIC interpretations that are effective for the first
time for the financial year beginning on or after 1 November 2017 that would be
expected to have a material impact on the Group.
Standards, Interpretations and Amendments to Published Standards which Are Not
Yet Effective
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 November
2017 and have not been early adopted:
Reference Title Summary Application
date of
standard
(Periods
commencing on
or after)
Amendments First-time Amendments resulting from Annual 1 November 2018
to IFRS 1 adoption of Improvements 2014-2016 Cycle
International (removing short-term exemptions)
Financial Reports
Standards
Amendments Share-based Amendments to clarify the 1 November 2018
to IFRS 2 payments classification and measurement of
share based payment transactions
Amendment to Insurance Amendments regarding the 1 November 2018
IFRS 4 Contracts interaction of IFRS 4 and IFRS 9
IFRS 9 Financial Requirements on the classification 1 November 2018
Instruments and measurement of financial
assets and liabilities and
includes an expected credit losses
model which replaces the current
loss impairment model. Also
includes the hedging amendment
that was issued in 2013
Amendments Disclosure of Amendments resulting from Annual 1 November 2017
to IFRS 12 interests in Improvements 2014-2016 (Clarifying
other entities Scope)
IFRS 15 Revenue from Specifies how and when to 1 November 2018
contracts with recognize revenue from contracts
customers as well as requiring more
information and relevant
disclosures.
IFRS 16 Leases Original Issue 1 November 2019
IFRS 17 Insurance Establishes principles for the
Contracts recognition, measurement, 1 November 2021
presentation and disclosure of
insurance contracts issued.
Amendments Statement of Cash Amendments as a result of the 1 November 2017
to IAS 7 Flows disclosure initiative
Amendments Income Taxes Amendments regarding the 1 November 2017
to IAS 12 recognition of deferred tax assets
for unreleased losses
Amendments Investments in Amendments resulting from Annual 1 November 2018
to IAS 28 Associates and improvements 2014-2016 cycle
Joint Ventures (Clarifying certain fair value
measurements
Amendments Financial Amendments to permit entity to 1 November 2018
to IAS 39 Instruments: elect to continue to apply the
Recognition and hedge accounting requirements in
measurement IAS 39 for a fair value hedge of
the interest rate exposure of a
portion of a portfolio of
financial assets or financial
liabilities when IFRS 9 is applied
and to extend the fair value
option to certain contracts that
meet the 'own use' scope exception
Amendments Investment Amendments to clarify transfers or 1 November 2018
to IAS 40 Property property to or from investment
property
Amendments Foreign Currency Amendments to clarify the 1 November 2018
to IFRIC 22 transactions and accounting for transactions that
advance include the receipt or payment of
consideration advance consideration in a foreign
currency.
Amendments Uncertainty over Addresses how to reflect 1 November 2018
to IFRIC 23 income tax uncertainty in accounting for
treatments income taxes.
The Directors anticipate that the adoption of these standards and the
interpretations in future periods will have no material impact on the financial
statements of the Group.
b. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31st October each year. Control is achieved where the Company has the power
to govern the financial and operating policies of an investee entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated statement of comprehensive income from the
effective date of acquisition or up to the effective date of disposal, as
appropriate. Where necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with those used by
other members of the Group. All intra-group transactions, balances, income and
expenses are eliminated on consolidation.
Changes in the Group's ownership interests in subsidiaries that do not result
in the Group losing control over the subsidiaries are accounted for as equity
transactions. The carrying amounts of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiaries.
When the Group loses control of a subsidiary, the profit or loss on disposal is
calculated as the difference between (i) the aggregate of the fair value of the
consideration received and the fair value of any retained interest and (ii) the
previous carrying amount of the assets (including goodwill), and liabilities of
the subsidiary and any non-controlling interests. Where certain assets of the
subsidiary are measured at revalued amounts or fair values and the related
cumulative gain or loss has been recognised in other comprehensive income and
accumulated in equity, the amounts previously recognised in other comprehensive
income and accumulated in equity are accounted for as if the Company had
directly disposed of the related assets (i.e. reclassified to profit or loss or
transferred directly to retained earnings). The fair value of any investment
retained in the former subsidiary at the date when control is lost is regarded
as the fair value on initial recognition for subsequent accounting under IAS 39
"Financial Instruments: Recognition and Measurement" or, when applicable, the
cost on initial recognition of an investment in an associate or a jointly
controlled entity.
Notes to the Consolidated Financial Statements (Continued)
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the
assets transferred by the Group, liabilities incurred by the Group to the
former owners of the acquiree and the equity interests issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are recognised
in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognised at their fair value at the acquisition date, except
that:
* Deferred tax assets or liabilities and liabilities or assets related to
employee benefit arrangements are recognised and measured in accordance
with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
* Liabilities or equity instruments related to share-based payment
transactions of the acquiree or the replacement of an acquiree's
share-based payment transactions with share-based payment transactions of
the Group are measured in accordance with IFRS 2 Share-based Payment at the
acquisition date; and
* Assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations are measured in accordance with that standard.
Goodwill
Goodwill is measured as the excess of the sum of the consideration transferred,
the amount of any non-controlling interests in the acquiree, and the fair value
of the acquirer's previously held equity interest in the acquiree (if any) over
the net of the acquisition-date amounts of the identifiable assets acquired and
the liabilities assumed. If, after assessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds
the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognised immediately in
profit or loss as a bargain purchase gain.
Joint Ventures and Associates
A joint venture is a contractual agreement under which two or more parties
conduct an economic activity and unanimous approval is required for the
financial and operating policies. Associates are all entities over which the
Group has significant influence but not control, generally accompanying a
shareholding between 20% and 50% of the voting rights. Joint ventures and
associates are accounted for using the equity method, which involves
recognition in the consolidated income statement of AAA's share of the net
result of the joint ventures and associates for the year. Accounting policies
of joint ventures and associates have been changed where necessary to ensure
consistency with the policies adopted by the Group. AAA's interest in a joint
venture or associate is carried in the statement of financial position at its
share in the net assets of the joint venture or associate together with
goodwill paid on acquisition, less any impairment loss. When the share in the
losses exceeds the carrying amount of an equity-accounted company (including
any other receivables forming part of the net investment in the company), the
carrying amount is written down to nil and recognition of further losses is
discontinued, unless we have incurred legal or constructive obligations
relating to the company in question.
Notes to the Consolidated Financial Statements (Continued)
c. Property, Plant and Equipment
Property, plant and equipment are stated at historical cost less subsequent
accumulated depreciation and accumulated impairment losses, if any. Historical
cost includes expenditure that is directly attributable to the acquisition of
the items. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss during the financial year in which
they are incurred. Depreciation on property, plant and equipment is calculated
using the straight-line method to write off their cost over their estimated
useful lives at the following annual rates:
Leasehold improvements 33.3%
Furniture, fixtures and 17%
equipment
Plant and machinery 20%
Computer equipment 33.3%
Useful lives and depreciation method are reviewed and adjusted if appropriate,
at the end of each reporting year.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales
proceeds and the carrying amount of the relevant asset, and is recognised in
profit or loss in the year in which the asset is derecognised.
d. Investments in Subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate,
provisions for impairment.
e. Inventories
Inventories are carried at the lower of cost and net realisable value. Cost is
determined using specific identification and in the case of work in progress
and finished goods, comprises the cost of purchase, cost of conversion and
other costs incurred in bringing the inventories to their present location and
condition. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated cost of completion and applicable selling
expenses.
When the inventories are sold, the carrying amount of those inventories is
recognised as an expense in the year in which the related revenue is
recognised. The amount of any write-down of inventories to net realisable value
and all losses of inventories are recognised as an expense in the year in which
the write-down or loss occurs. The amount of any reversal of any write-down of
inventories is recognised as an expense in the year in which the reversal
occurs.
Notes to the Consolidated Financial Statements (Continued)
f. Impairment of Non-Financial Assets
The Group assesses at each reporting date whether there is an indication that
an asset may be impaired. If any such indication exists, or when an annual
impairment assessment for an asset is required, the Group makes an estimate of
the asset's recoverable amount. An asset's recoverable amount is the higher of
an asset's or cash-generating unit's fair value less costs to sell and its
value in use and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely dependent on those from other
assets. Where the carrying amount of an asset or cash generating unit exceeds
its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount. In assessing value in use, the estimated future cash
flows expected to be generated by the asset are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset. In determining
fair value less costs to sell, recent market transactions are taken into
account, if available. If no such transactions can be identified, an
appropriate valuation model is used. These calculations are corroborated by
valuation multiples or other available fair value indicators.
Impairment losses are recognised in profit or loss in those expense categories
consistent with the function of the impaired asset, except for assets that are
previously revalued where the revaluation was taken to other comprehensive
income. In this case, the impairment is also recognised in other comprehensive
income up to the amount of any previous revaluation.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the Group estimates the asset's
or cash-generating unit's recoverable amount.
A previously recognised impairment loss is reversed only if there has been a
change in the estimates used to determine the recoverable amount of an asset
since the last impairment loss was recognised. If that is the case, the
carrying amount of the asset is increased to its recoverable amount. This
increase cannot exceed the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised previously. Such
reversal is recognised in the profit and loss unless the asset is measured at
revalued amount, in which case the reversal is treated as a revaluation
increase.
g. Financial Instruments
Financial assets and financial liabilities are recognised on the statement of
financial position when an entity becomes a party to the contractual provisions
of the instruments. Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than
financial assets and financial liabilities at fair value through profit or
loss) are added to or deducted from the fair value of the financial assets or
financial liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
the income statement.
i. Financial Assets
The Group's accounting policies for financial assets are set out below.
Management determine the classification of its financial assets at initial
recognition depending on the purpose for which the financial assets were
acquired and where allowed and appropriate, re-evaluate this designation at
every reporting date.
Notes to the Consolidated Financial Statements (Continued)
All financial assets are recognised on a trade date when, and only when, the
Group becomes a party to the contractual provisions of an instrument. When
financial assets are recognised initially, they are measured at fair value plus
transaction costs, except for those finance assets classified as at fair value
through profit or loss ('FVTPL'), which are initially measured at fair value.
Financial assets are classified into the following specified categories:
financial assets at FVTPL, 'held-to-maturity' investments, 'available for sale'
(AFS) financial assets and loans and receivables. The classification depends on
the nature and purpose of the financial assets and is determined at the time of
recognition.
Derecognition of financial assets occurs when the rights to receive cash flows
from the investments expire or are transferred and substantially all of the
risks and rewards of ownership have been transferred.
At each reporting date, financial assets are reviewed to assess whether there
is objective evidence of impairment. If any such evidence exists, impairment
loss is determined and recognised based on the classification of the financial
asset.
Loans and receivables (including trade receivables, prepayments, deposits and
other receivables, cash and bank balances) are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. At each reporting date subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any identified impairment losses. An impairment loss is recognised in the statement of comprehensive income when there is objective evidence that the asset is impaired, and is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. Impairment losses are reversed in subsequent periods when an increase in the asset's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to a restriction that the carrying amount of the asset at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. ii. Financial Liabilities and Equity Financial liabilities and equity are recognised on the Group's statement of financial position when the Group becomes a party to a contractual provision of an instrument. Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of transaction costs. The Group's financial liabilities include amounts due to a director, trade payables and accrued liabilities. These financial liabilities are classified as FVTPL are stated at fair value with any gains or losses arising on re-measurement recognised in profit or loss. Other financial liabilities, including borrowings are initially measured at fair value, net of transaction costs. Other financial liabilities, including borrowings, are subsequently measured at amortised cost using the effective interest rate method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant year. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. Notes to the Consolidated Financial Statements (Continued) Financial liabilities are de-recognized when the obligation specified in the relevant contract is discharged, cancelled or expires. The difference between the carrying amount of the financial liability derecognised and the consideration paid is recognised in the statement of comprehensive income. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income. iii. Trade and Other Receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment losses for bad and doubtful debts, except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be material. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts. iv. Trade and Other Payables Liabilities for trade and other payables which are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method, unless the effect of discounting would not be material, in which case they are stated at cost. v. Fair Values The carrying amounts of the financial assets and liabilities such as cash and cash equivalents, receivables and payables of the Group at the balance sheet date approximated their fair values, due to the relatively short term nature of these financial instruments. h. Borrowings Borrowings are presented as current liabilities unless the Group has an unconditional right to defer settlement for at least 12 months after the balance sheet date, in which case they are presented as non-current liabilities. Borrowings are initially recorded at fair value, net of transaction costs and subsequently carried for at amortised costs using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the year of the borrowings using the effective interest method. Borrowings which are due to be settled within twelve months after the balance sheet date are included in current borrowings in the balance sheet even though the original term was for a period longer than twelve months and an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the balance sheet date and before the financial statements are authorised for issue. i. Revenue Recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for the sales of goods and the use by others of the Group's assets yielding interest, net of rebates and discounts. Revenue on sales of goods is recognised on the transfer of risks and rewards of ownership, which generally coincides with the time when the goods are delivered to customers and title has been passed. Interest income from a financial asset, is recognised on an accrual basis using the effective interest rate method by applying the rate that exactly discounts the estimated future cash receipts through the expected life of the financial instrument or a shorter period, when appropriate, to the net carrying amount of the financial asset. Notes to the Consolidated Financial Statements (Continued) j. Cost of Sales Cost of sales consists of all costs of purchase and other directly incurred costs. Cost of purchase comprises the purchase price, import duties and other taxes (other than those subsequently recoverable by the Group from the taxing authorities), if any, and transport, handling and other costs directly attributable to the acquisition of goods. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase. Cost of conversion primarily consists of hiring charges of subcontractors incurred during the course of conversion. k. Borrowing Costs Borrowing costs are expensed in the year in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. l. Taxation Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income and expense that are taxable or deductible in other years, and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting year. Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at the end of the each reporting year and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year in which the liability is settled or the asset realised. The measurement of deferred tax assets and liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting year, to recover or settle the carrying amount of its assets and liabilities. Notes to the Consolidated Financial Statements (Continued)
Current or deferred tax for the year is recognised in profit or loss, except when it relates to items that are recognised in other comprehensive income or directly in equity, in which case the current and deferred tax is also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination. m. Cash and Cash Equivalents Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated statement of cash flows. n. Provisions and Contingencies Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. When the effect of discounting is material, the amount recognised for a provision is the present value at the reporting date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the statement of comprehensive income. Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable. o. Share Capital Ordinary shares are classified as equity. Proceeds from issuance of ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares are deducted against share capital. p. Foreign Currencies In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e. the currency of the primary economic environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At the end of the reporting year, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are not retranslated. Notes to the Consolidated Financial Statements (Continued) Exchange differences arising on the settlement of monetary items, and on translation of monetary items, are recognised in profit or loss in the year in which they arise. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the year except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income, in which cases, the exchange differences are also recognised directly in other comprehensive income. For the purposes of presenting the consolidated financial statements, assets and liabilities of the Group's foreign operations are translated into the presentation currency of the Group (i.e. South African Rand) at the rate of exchange prevailing at the end of the reporting year, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during that year, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity. The principal exchange rates during the year are set out in the table below: Rate compared to Year End Rate Year End Rate GBP 2017 2016 South African 18.75 16.58 Rand US Dollar 1.32 1.23 q. Finance Leases Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are treated as a reduction of the lease obligation on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised. Contingent rentals are recognised as expenses in the years in which they are incurred. r. Operating Leases Where the Group has the use of assets held under operating leases, payment made under the leases are charged to profit or loss over the accounting years covered by the lease term except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives received are recognised in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting years in which they are incurred. s. Employee Benefits Salaries, annual bonuses, paid annual leave and the cost to the Group of non-monetary benefits are accrued in the year in which employees of the Group render the associated services. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. t. Segmental Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the executive Directors who make strategic decisions. Notes to the Consolidated Financial Statements (Continued) 3. Critical Accounting Estimates and Judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the application of the Group's accounting policies, which are described above, management is required to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and assumptions that had a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below. a. Inventory Valuation Inventory is valued at the lower of cost and net realisable value. Net realisable value of inventories is the estimated selling price in the ordinary course of business, less estimated costs of completion and selling expenses. These estimates are based on the current market conditions and the historical experience of selling products of a similar nature. It could change significantly as a result of competitors' actions in response to severe industry cycles. The Group reviews its inventories in order to identify slow-moving merchandise and uses markdowns to clear merchandise. Inventory value is reduced when the decision to markdown below cost is made. b. Impairment of Receivables The Group's management reviews receivables on a regular basis to determine if any provision for impairment is necessary. The policy for the impairment of receivables of the Group is based on, where appropriate, the evaluation of collectability and ageing analysis of the receivables and on management's judgement. A considerable amount of judgement is required in assessing the ultimate realisation of these outstanding amounts, including the current creditworthiness and the past collection history of each debtor. If the financial conditions of debtors of the Group were to deteriorate, resulting in an impairment of their ability to make payments, provision for impairment may be required. c. Income Taxes The Group is subject to income taxes in South Africa and the UK. Significant judgement is required in determining the provision for income taxes and the timing of payment of the related tax. There are certain transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax provision in the year in which such determination is made. d. Share Based Payments
The fair value of share-based payments recognised in the income statement is
measured by use of the Black Scholes model, which takes into account conditions
attached to the vesting and exercise of the equity instruments. The expected
life used in the model is adjusted; based on management's best estimate, for
the effects of non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used in the
calculation is based on management's best estimate of future share price
behaviour based on past experience, future expectations and benchmarked against
peer companies in the industry.
Notes to the Consolidated Financial Statements (Continued)
e. Depreciation and Amortisation
The Group depreciates property, plant and equipment and amortises the leasehold
land and land use rights on a straight-line method over the estimated useful
lives. The estimated useful lives reflect the Directors' estimate of the years
that the Group intends to derive future economic benefits from the use of the
Group's property, plant and equipment.
4. Segmental Reporting
In the opinion of the Directors, the Group has one class of business, being the
trading of agricultural materials. The Group's primary reporting format is
determined by the geographical segment according to the location of its
establishments. There is currently only one geographic reporting segment, which
is South Africa. All revenues and costs are derived from the single segment.
5. Other Income
2017 2016
GBP GBP
Other income 673 2,767
Other Income represents the bad debts recovered and sundry income.
6. Personnel Expenses and Staff Numbers (Including Directors)
Number Group Company
2017 2016 2017 2016
The average number of employees in the year were:
Directors 5 4 5 4
Management 3 3
Accounts and Administration 2 1 - -
Sales 2 2 - -
Manufacturing/Warehouse 16 15 - -
Total 28 25 5 4
GBP GBP GBP GBP
The aggregate payroll costs for these persons were: 383,121 255,873 55,656 18,994
Average ratio of executive pay verse average employee
pay 0.78 0.74
Notes to the Consolidated Financial Statements (Continued)
7. Directors' Remuneration
Salaries and Fees Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
David Lenigas 12,000 1,000 12,000 1,000
George Roach 12,000 6,000 12,000 6,000
Robert Scott 12,000 1,000 12,000 1,000
Andrew Monk * 13,656 6,828 13,656 6,828
Matt Bonner 6,000 - 6,000 -
Neil Herbert - 4,166 - 4,166
Craig Anthony Forbes - 16,357 - -
55,656 35,351 55,656 18,994
* Included in Andrew Monks remuneration is GBP 1,656 for National Insurance
8. Expenses - Analysis by Nature
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Auditors' remuneration for audit 10,500 6,000 10,500 6,000
services: Parent
Auditors' remuneration for other 750 - 750 -
services: Parent
Auditors' remuneration for audit 4,331 2,865 - -
services: Subsidiary
Depreciation on property, plant and 52,400 49,116 - -
equipment
(Gain) / loss on exchange (13,779) 7,657 - -
Personnel expenses (Note 6) 383,121 255,873 55,656 18,994
Other administrative expenses 423,094 343,707 94,499 78,801
Sub-total 860,417 665,218 161,405 103,795
Impairment of loan to Joint Venture 73,566 - - -
Admission expenses 106,992 - 106,992 -
Loss from Associated entity 9,954 - 9,954 -
Total administrative expenses 1,050,929 665,218 278,351 103,765
9. Finance Costs
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Interest 17,748 97,771 - -
Notes to the Consolidated Financial Statements (Continued)
Finance costs represent interest and charges in respect of the discounting of
invoices.
10. Taxation
The charge for the year can be reconciled to the profit before taxation per the
consolidated statement of comprehensive income as follows:
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Tax Charge - - - -
Factors affecting the tax charge:
Loss on ordinary activities before (550,257) (433,034) (278,351) (99,656)
taxation
Loss on ordinary activities before (108,676) (86,609) (54,974) (19,931)
taxation multiplied by standard rate
of UK corporation tax of 19.75%
(2016: 20%)
Tax effect of expense not deductible 1,522 2,000 1,522 2,000
for tax
Tax effect of utilisation of tax 107,154 84,609 53,452 17,931
losses
Difference - Actual and Parent tax - - - -
rate
Tax Charge - - - -
The Company has excess management expenses of GBP187,346 (2016 - GBP184,548)
available for carry forward against future trading profits. The deferred tax
asset in these tax losses at 19.75% of GBP37,001 (2016 - GBP36,910) has not been
recognised due to the uncertainty of recovery.
11. Loss Per Share
Loss per share data is based on the Group result for the year and the weighted
average number of shares in issue.
Basic loss per share is calculated by dividing the loss attributable to equity
shareholders by the weighted average number of ordinary shares in issue during
the year:
Group
2017 2016
GBP GBP
Loss after tax (550,257) (433,034)
Weighted average. number of ordinary shares in issue 194,791,752 114,461,821
Basic and diluted loss per share (pence) (0.28p) (0.38p)
Basic and diluted earnings per share are the same, since where a loss is
incurred the effect of outstanding share options and warrants is considered
anti-dilutive and is ignored for the purpose of the loss per share calculation.
As at 31 October 2017 there were 2,761,330 (31 October 2016 - 12,638,660)
outstanding share warrants and 20,956,184 (2016 - 17,356,184) outstanding
options, both are potentially dilutive.
Notes to the Consolidated Financial Statements (Continued)
12. Dividends
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Dividends Paid - - - -
13. Investments
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Investment in Subsidiary - - 297,915 297,915
Investment in Associate 90,046 - 90,046 -
13.1. Investment in Associate
Group Group Company Company
2017 2016 2017 2016
GBP GBP GBP GBP
Investment in Dynamic Intertrade Agri 100,000 - 100,000 -
(Pty) Ltd
Share of loss of Associate (9,954) - (9,954) -
Carrying value 90,046 - 90,046 -
As at 31 October 2017, the Company directly and indirectly held the following
subsidiary and associate:
Name of company Principal Country of Proportion (%) Proportion (%)
activities incorporation and of equity of equity
place of business interest interest
2017 2016
Dynamic Trading in South Africa 100% 100%
Intertrade (Pty) Agricultural
Limited Products
Dynamic Agricultural South Africa 46.8% -
Intertrade Agri commodity trading
(Pty) Limited and distribution
On 3 November 2016 the group acquired 46.8% in Dynamic Intertrade Agri (Pty)
Ltd ("DIA"), which investment has been equity accounted since acquisition.
Notes to the Consolidated Financial Statements (Continued)
Summarised financial information of the associate company
2017 2016
Non-current assets 5,793 -
Current assets 134,466 -
Cash and cash equivalents 1,819
Total assets 144,094 -
Non-current liabilities 48,137 -
Current liabilities 62,909 -
Total Liabilities 111,045 -
Turnover 1,226,678 -
Loss before taxation (28,470) -
Total comprehensive income (28,470) -
Depreciation 2,482 -
Interest Income 267 -
Interest Expensed -
-
Income tax expense -
-
14. Loan to Joint Venture
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Loan to Joint Venture - 84,473 - -
On 22 November 2016 the Group agreed to sell its 49.9% interest in Africa
Projects and Ventures, a joint venture with Lamberti based in South Africa.
In the prior year the loan represented an interest free long term loan made to
Africa Projects and Ventures. During the year under review this loan was
impaired in full and a charge of GBP73,566 (2016: GBP nil) was taken to Income and
expense.
On 31 October 2017 the company's wholly owned subsidiary Dynamic Intertrade
(Pty) Limited ("Dynamic") entered into the Sale and Purchase Agreement in terms
of which Dynamic will sell the 49.9% of the allotted and issued share capital
of APV African Projects and Ventures (Pty) Limited to Misty Rose Properties 11
CC, a company owned by Mr G Roach for the total sum of ZAR1.00.
Notes to the Consolidated Financial Statements (Continued)
15. Property, Plant and Equipment
Group Leasehold Furniture and Plant and Total
Property fixtures machinery
GBP GBP GBP GBP
Cost
At 01 November 2016 25,007 4,505 436,449 465,961
Additions 2,918 733 26,978 30,629
Disposals (4,650) - - (4,650)
Exchange differences (2,959) (640) (56,335) (59,934)
As at 31 October 2017 20,316 4,598 407,092 432,006
Depreciation
At 01 November 2016 11,332 2,552 292,482 306,366
Charge for the year 7,574 485 44,341 52,400
Released on disposal (4,635) - - (4,635)
Exchange differences (2,320) (392) (40,735) (43,447)
As at 31 October 2017 11,951 2,645 296,088 310,684
Net Book Value
As at 31 October 2017 8,365 1,953 111,004 121,322
At 01 November 2016 13,675 1,953 143,967 159,595
The holding company held no tangible fixed assets at 31 October 2017 and 2016.
16. Goodwill
Goodwill has been calculated as GBP226,644 (2016: GBP226,644) and is measured as
the excess of the sum of the consideration paid and the fair value of the
acquirer's previously held equity interest in the acquiree over the net of the
acquisition-date amounts of the identifiable assets acquired and the
liabilities assumed.
Goodwill has been tested for impairment as at the balance sheet date. The
recoverable amount of goodwill at 31 October 2016 and 2017 was assessed on the
basis of value in use. As this exceeded the carrying values no impairment loss
was recognised. The key assumptions in the calculation to assess value in use
are future revenues and the ability to generate future cash flows.
The most recent financial results and forecasts for the next year were used,
followed by an extrapolation of future cash flows using a price earnings ratio.
The projected results were discounted at a rate which is a prudent evaluation
of the pre-tax rate that reflects current market assessments of the time value
of money and risks specific to the cash-generating unit.
The key assumptions used in the value in use calculations in 2016 and 2017 were
as follows:
- A discount rate of 10%
- Sales growth of 18%
- Weighting of probabilities assigned to potential earnings.
Notes to the Consolidated Financial Statements (Continued)
The Directors believe the significance of the earning potential identified mean
that the goodwill does not require impairment at this early stage.
17. Inventories
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Raw materials 115,114 152,976 - -
Work-in-progress 14,497 4,344 - -
Finished goods 74,171 9,073 - -
203,782 166,393 - -
18. Trade and other receivables
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Trade Receivables 344,389 432,321 - -
Other Receivables 36,025 8,134 18,470 8,134
380,414 440,455 18,470 8,134
Group Trade receivables represent amounts receivable on the sale of
agricultural products and are included after provisions for doubtful debts.
The Directors consider that the carrying amount of trade receivables and other
receivables approximates their fair value.
19. Cash and Cash Equivalents
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Cash on hand 75,952 268,790 43,299 240,337
20. Trade and Other Payables
Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Trade payables 859,717 842,782 143,368 33,455
Other payables 46,477 14,554 - -
Related party payables 50,547 26,161 - -
956,741 883,497 143,368 33,455
Notes to the Consolidated Financial Statements (Continued)
Trade payables represent amounts due for the purchase of agriculture materials
and administrative expenses. The Directors consider that the carrying amount of
trade payables approximates to their fair value.
Included in other payables are the following related party financial
liabilities:
G Roach 23,131 26,161
M Bonner 27,416
-
Terms:
G Roach: The loan bears interest at the South African prime overdraft rate. The
interest will be calculated and paid when the loan is repaid. The loan is
repayable as decided upon from time to time.
M Bonner: The loan bears interest at the South African prime overdraft rate.
The interest is calculated and paid quarterly. The loan is repayable as decided
upon from time to time.
21. Share Capital and Share Premium
Allotted, called up and fully paid Number Nominal Share Total
share capital and share premium Value Premium
GBP GBP GBP
Balance at 1 November 2015 94,896,125 94,896 1,107,373 1,202,269
Issued during the year 85,895,321 85,896 464,104 550,000
Balance at 31 October 2016 180,791,446 180,792 1,571,477 1,752,269
Issued during the year 26,192,308 26,192 194,058 220,250
Balance at 31 October 2017 206,983,754 206,984 1,765,535 1,972,519
Share capital is the amount subscribed for shares at nominal value.
Retained losses represent the cumulative loss of the Group attributable to
equity shareholders.
Share-based payments reserve relate to the charge for share-based payments in
accordance with IFRS 2.
During the year the company placed these shares and as the number of placing
shares comprised more than 10% of the companies issued share capital, and
although the placing shares has been allotted, admission of the placing shares
required publication of a Prospectus within a twelve month period. On 22 March
2017, the company announced that the Prospectus had been approved by the UK
Listing Authority. The April 2016, September 2016 and March 2017 shares were
admitted to the Standard Listing segment of the Official List of the UK Listing
Authority and to trading on the London Stock Exchange Main Market. In total
these shares amounted to 93,587,829 Ordinary Shares.
22. Share Based Payments Reserve
The Company has a share-ownership compensation scheme for senior executives of
the Company whereby senior executives may be granted options to purchase
Ordinary Shares in the Company.
Notes to the Consolidated Financial Statements (Continued)
Warrants
There are 2,761,330 warrants to subscribe for ordinary shares at 31 October
2017 (31 October 2016: 12,638,660). Of these:-
* 2,761,330 warrants are exercisable at a price of 1.5p and were issued as
consideration to the joint financial advisers of the Company, Zeus Capital
Limited and VSA Capital Limited.
* In the prior year 9,877,330 warrants were exercisable at a price of 2.75p,
all of which expired during the current year.
Options
At 1 November 2016 there were 17,356,184 share options issued to the directors
and a senior manager of the Company. During the year a further 3,600,000 share
options were granted to a Director (2016: 11,839,046).
The movement on the share based payment charge for the year was GBP8,572 (2016 -
GBP-3,714) in respect of the issued options. The details of warrants and options
are as follows:
Date of At 01 Granted/ Forfeits At 31 Exercise Exercise/Vesting Date
November 2016 Exercised/ October
Grant Vested 2017 Price From
To
Warrants
06/09/2012 2,761,330 - - 2,761,330 1p 06/09/2012 05/09/2022
11/08/2014 9,877,330 - 9,877,330 - 2.75p 11/08/2014 31/01/2017
Options
06/09/2012 17,356,184 3,600,000 - 20,956,184 1p 13/08/2014 05/09/2022
29,994,844 3,600,000 9,877,330 23,717,514
The remuneration committee's aim is to remunerate executive directors
competitively and to reward performance. The remuneration committee determines
the company's policy for the remuneration of executive directors, having regard
to the UK Corporate Governance Code and its provisions on directors'
remuneration.
The number of warrants and options outstanding to the Directors that served in
the year, as at 31 October 2017 were as follows:
2017 2017 2016 2016
Director Warrants Options Warrants Options
Andrew Monk - 3,839,046 - 3,839,046
George Roach - 3,839,046 - 3,839,046
Robert Scott - 1,000,000 - 1,000,000
Matthew Bonner - 3,600,000 - -
Sub-total - 12,278,092 - 12,517,138
Neil Herbert * - 3,839,046 6,000,000 3,839,046
Total - 16,117,138 6,000,000 15,090.784
* Neil Herbert resigned as a Director on 5 September 2016 and his warrant
options expired on 31 January 2017.
Notes to the Consolidated Financial Statements (Continued)
The estimated fair value of the options in issue was calculated by applying the
Black-Scholes option pricing model. The assumptions used in the calculation
were as follows:
Share price at date of grant GBP0.001- GBP0.225 / GBP
0.025
Exercise price GBP0.0055
Expected volatility 30%
Expected dividend 0%
Contractual life 5 years
Risk free rate 1.25%
Estimated fair value of each GBP0.0045
option
The share options outstanding at the year-end had a weighted average remaining
contractual life of 4.5 years (2016: 6 years).
23. Operating lease
Operating lease charges Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Premises 94.001 71,605 - -
Equipment 5,019 3,977 - -
99,020 75,582 - -
Minimum lease payments Group Company
2017 2016 2017 2016
GBP GBP GBP GBP
Not later than one year 105,132 75,582 - -
Between one year and five years 196,635 301,767 - -
Later than five years - - - -
301,767 377,349 - -
24. Financial instruments
The Group uses financial instruments comprising cash, trade and other
receivables and trade and other payables. Cash balances are held in Sterling,
US Dollars and South African Rand.
The Group has a policy of not hedging and therefore takes market rates in
respect of foreign exchange risk. However, rates are monitored closely by
management.
Notes to the Consolidated Financial Statements (Continued)
Financial assets and liabilities
2017 Cash and Financial
receivables liabilities Total
GBP at amortised GBP
cost
GBP
Trade and other receivables 344,389 - 344,389
Other receivables 36,025 - 36,025
Cash and cash equivalents 75,952 - 75,952
456,366 - 456,366
Trade payables - 859,718 859,718
Other payables - 46,477 46,477
Related party payables - 50,547 50,547
- 956,742 956,742
2016 Cash and Financial
receivables liabilities Total
GBP at amortised GBP
cost
GBP
Trade and other receivables 432,321 - 432,321
Other receivables 8,134 - 8,134
Cash and cash equivalents 268,790 - 268,790
709,245 - 709,245
Trade payables - 842,782 842,782
Other payables - 34,554 34,554
Related party payables - 26,161 26,161
883,497 883,497
Valuation techniques and assumptions applied for the purposes of measuring fair
value
The fair value of cash and receivables and liabilities approximates the
carrying values disclosed in the financial statements.
Capital management
The Group manages its capital resources to ensure that entities in the Group
will be able to continue as a going concern, while maximising shareholder
return.
The capital structure of the Group consists of equity attributable to
shareholders, comprising issued share capital and reserves. The availability of
new capital will depend on many factors including a positive operating
environment, positive stock market conditions, the Group's track record, and
the experience of management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash resources exist
or will be made available to finance operations but controls over expenditure
are carefully managed.
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currencies.
Hence, exposures to exchange rate fluctuations arise.
The carrying amounts of the Group's foreign currency denominated monetary
assets and monetary liabilities at the reporting date are as follows:
Notes to the Consolidated Financial Statements (Continued)
Liabilities Assets
2017 2016 2017 2016
GBP GBP GBP GBP
United States dollar (USD$) - - 177 177
South African Rand (ZAR) 813,376 823,880 598,379 627,168
813,376 823,880 598,556 627,345
Cash and cash equivalents
Liabilities Assets
2017 2016 2017 2016
GBP GBP GBP GBP
Sterling - - 43,122 240,337
United States dollar (USD$) - - 177 -
South African Rand (ZAR) - - 32,653 28,453
- - 75,952 268,790
The presentation currency of the Group is UK Pounds sterling.
The Group is exposed primarily to movements in Sterling and South African Rand,
the former currency in which the Group receives most of its funding, against
other currencies in which the Group incurs liabilities and expenditure.
Sensitivity analysis
Financial instruments affected by foreign currency risk include cash and cash
equivalents, trade other receivables and trade and other payables. The
following analysis, required by IFRS 7 Financial Instruments: Disclosures, is
intended to illustrate the sensitivity of the Group's financial instruments (at
year end) to changes in market variables, being exchange rates.
The following assumptions were made in calculating the sensitivity analysis:
* All income statement sensitivities also impact equity
* Translation of foreign subsidiaries and operations into the Group's
presentation currency have been excluded from this sensitivity as they have
no monetary effect on the results
Income Statement / Equity
2017 2016
GBP GBP
Exchange rates:
+10% US$ Sterling (GBP) 18 17
-10% US$ Sterling (GBP) (18) (17)
+10% South African Rand (ZAR) Sterling 3,265 2,845
(GBP)
-10% South African Rand (ZAR) Sterling (3,265) (2,845)
(GBP)
The above sensitivities are calculated with reference to a single moment in
time and will change due to a number of factors including:
* Fluctuating other receivable and trade payable balances
* Fluctuating cash balances
* Changes in currency mix
Notes to the Consolidated Financial Statements (Continued)
Credit risk
Financial instruments that potentially subject the Group to a significant
concentration of credit risk consist primarily of trade receivables and cash
and cash equivalents. The Group limits its exposure to credit loss from trade
receivables by reviewing credit exposures to all customers and discounting of
trade receivables. The Group limits its exposure to credit loss by placing its
cash with major financial institutions. As at 31 October 2017, the Group held GBP
75,952 in cash and cash equivalents (2016: GBP268,790).
Liquidity risk
All of the Group's financial liabilities are classified as current. The Group
intends to settle these liabilities from revenue generated from sales
production and working capital.
Market risk
The group's investments in an associate company comprise a non-controlling
shareholding in an unlisted company. The shares are not readily tradable and
any monetisation of the shares is dependent on finding a willing buyer.
25. Related Party Transactions
Director's fees
The previous Chairman, Andrew Monk, is a director of VSA Capital Limited and
that company provided services amounting to GBP79,433 (2016 - GBP40,000) to the
Company during the year.
During the year ended 1 October 2017 GBP15,104 was paid to Directors of the
company (2016: GBP14,856) As at 31 October 2017 GBP39,000 remained unpaid to the
directors of the company (2016: GBP4,138).
Other related party transactions
1. Included in trade and other payables are the following related party
financial liabilities:
2017 2016
GBP GBP
G Roach 23,131 26,161
M Bonner 27,416 -
Terms:
G Roach: The loan bears interest at prime overdraft rate. The interest will be
calculated and paid when the loan is repaid. The loan is repayable as decided
upon from time to time.
M Bonner: The loan bears interest at prime overdraft rate. The interest will be
calculated and paid when the loan is repaid. The loan is repayable as decided
upon from time to time.
2. African Projects and Ventures ("APV").
On 31 October 2017 the company's wholly owned subsidiary Dynamic Intertrade
(Pty) Limited ("Dynamic") entered into the Sale and Purchase Agreement in terms
of which Dynamic will sell the 49.9% of the allotted and issued share capital
of APV African Projects and Ventures (Pty) Limited to Misty Rose Properties 11
CC, a company owned by Mr G Roach for the total sum of ZAR1.00.
Notes to the Consolidated Financial Statements (Continued)
26. Controlling Party Note
There is no single controlling party. Significant shareholders are listed in
the Directors Report and Business Review.
27. Events Subsequent to 31 October 2017
On 23 November 2017 Mr Rob Scott, an existing Non-Executive Director of the
Company, took on the role of Executive Director. Mr Scott will be responsible
for driving growth and seeking acquisitions.
On 1 November 2017 AAA raised GBP113,035 by way of subscription of 20,000,000 new
ordinary shares of 0.1p each at a price of 0.7p per Subscription Share. The
Subscription proceeds will be used to provide additional working capital.
28. Financial Instruments Risks
The risks posed to the Company are set out in the Strategic Report. The
Directors do not consider that there are any significant changes in the
Company's risk profile.
END
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